Exploring the relationship between performance-related pay and risk behaviours: the role of emotion and contextual evaluation in a case study of financial traders

This thesis explores one of the most strongly debated topics since the last financial crisis: the nature of the relationship between performance-related pay (PRP) and risk behaviours. Despite the conspicuous debate on this topic, we still do not fully understand how, when and why PRP influences risk behaviours. Extant PRP literature has produced mixed and inconclusive findings, primarily because it narrowly assumes that risk behaviours arise because of the incentive system. This overlooks the central role of cognitive perception and emotional experience in affecting risk behaviours. Thus, this thesis seeks to shed new light on this topic by exploring, both conceptually and empirically, how PRP influences risk behaviours via its effect on an individual’s cognitive perception and emotional experience of the decision context. Insights are developed by qualitatively exploring the lived experiences of individuals in a context relevant to the PRP–risk behaviours debate; financial trading. Narrative interviews with 21 financial traders and an informant, reveal that risk behaviours are not directly influenced by PRP. Rather, findings of this study suggest that PRP targets influence risk behaviours indirectly by providing individuals with information on the performance-context. The way in which individuals then evaluate this information, cognitively and emotionally, influences their risk behaviours. Furthermore, cognitive perception and emotion appear to have an interrelated effect on risk behaviours. This study contributes to an enhanced understanding of the nature of the impact of PRP on risk behaviours within-individuals. Moreover, it contributes to the risk literature by developing insights on the interrelated impact of cognition and distinct emotions on risk behaviours.

Name dc:type.qualificationname

phd

Level dc:type.qualificationlevel

doctoral

Grantor dc:publisher.institution

University of Greenwich

Year dc:date.issued

2017

Author dc:creator

• Vigors, Belinda

Advisors dc:contributor.advisor

• Mundy, Julia
• McCaffry, Rebecca

• HG Finance

Language dc:language

en